Britain must raise its retirement age as high as 69 by 2050 and increase the minimum state pension to meet the demands of a population that is living longer and having fewer children, a government-commissioned report found Wednesday.

The Pensions Commission proposed a national pension savings plan in which every individual will be enrolled automatically, though they will also have the option of dropping out, and called for a state pension system that is fairer to women.

"There are significant problems in our pensions system, there is a major demographic challenge," Lord Turner, the head of the commission, said at the release of the report.

"We have suggested that the state pension age will have to rise to somewhere between 67 and 69 by 2050 and that public expenditure on pension and pension benefits will need to rise from 6.2 percent of GDP today to between 7.5 percent and 8 percent GDP in 2050," the report said.

Turner said the commission was not recommending a rapid rise in the state pension age and had discounted some submissions that it should rise to 70 by 2030.

"On the basis of the present life expectancy forecast we believe that we will need to be in the range of 67 to 69 in 2050 to have an effective state pension system."

The report proposed a national savings plan under which employees would pay a minimum 5 percent of their earnings into a pension pot. Tax relief from the government would cover a fifth of that contribution.

To encourage employees to remain enrolled in the voluntary plan, employers would be obliged to provide a matching contribution of 3 percent. The program could begin in 2010 if given the go-ahead by the government next year, Turner said.

Work and Pensions Secretary John Hutton said the government welcomed the report as "the broad framework" for a national debate ahead of the publication of the government's own proposals in the spring.

Hutton added that the government was "ruling nothing in and nothing out ... the choice is not between the status quo and reform. The question is over how we act, not whether or when."

Britain's largest labor organization welcomed the report as "bold and hard-headed" despite objecting to a higher retirement age.

"We remain opposed to any proposal to increase the state pension age that would make manual workers and the poor worse off," said Brendan Barber, the leader of the Trades Union Congress.

"But the clear majority of the conclusions are undoubtedly progressive, and meet the tests we set in advance."

Turner was appointed to find solutions to pension woes common to industrialized countries: Workers are living longer, retiring earlier, having fewer children and saving less for their retirement.

In 1955, a 65-year-old British man could expect to live to 77 and a woman to 81. But by 2055, the commission said in a report last year, a 65-year-old man could expect to live to nearly 87 and a woman to 89.

According to the Pensions Commission, nearly 10 million people of working age are not saving enough for their retirement.

The European Union's working age population is estimated to drop from 303 million to 280 million by 2030, while the ratio of retirees to workers could almost double by 2050.

Italy has raised the age of retirement to obtain a full pension to 60 from 57. Belgian labor unions staged a nationwide strike last month against government plans to raise the earliest retirement age from 58 to 60. German lawmakers agreed this month that the retirement age should rise from 65 to 67 between 2012 and 2035.